An interim decision of the Ontario Human Rights Tribunal paves the way for a challenge to the legitimacy of the use of an offensive sports team name and logo during Major League Baseball (MLB) games at Rogers Centre in Toronto. The decision is of particular interest in that it dismisses arguments that the grant of a registered trademark in Canada confers a positive right to use that mark that cannot be interfered with by provincial legislation such as the Ontario Human Rights Code.

The challenge to offensive sports team names and logos is long overdue in Canada. In the United States, after having its own trademark invalidated for disparagement, Washington D.C.’s football team is awaiting the outcome of a U.S. Supreme Court challenge to the constitutionality of the provision of the Lanham Act used to bar the registration of an allegedly offensive trademark in another case. Although Washington’s trademarks are also registered in Canada, their legitimacy has yet to be challenged here. In 2015 Justice Murray Sinclair (now Senator Sinclair), head of the Truth and Reconciliation Commission, called for an end to the appropriation of indigenous names for sports teams and for a cessation of the use of racist names and logos. On the eve of the American League Baseball Championship Series in 2016, architect and activist Douglas Cardinal sought an injunction to prevent the broadcasting of the offensive name and logo of Cleveland’s major league baseball team. He argued that doing so would violate the Canadian Human Rights Act. He was unsuccessful in obtaining the injunction, but his related complaint to the Canadian Human Rights Commission – regarding discrimination in the provision of broadcasting services is ongoing. At the same time, Cardinal launched his complaint before the Ontario Human Rights Tribunal, arguing that when Cleveland’s team plays at Rogers Centre in Toronto, the provision of sports entertainment services (in the form of the games) is carried out in a discriminatory fashion. This is because Cardinal, a baseball fan, is confronted with racism in the form of the team name (the Indians) and logo (a grotesque caricature), particularly on the uniforms of the Cleveland team’s players.

The Cleveland team’s trademarks are registered in Canada. This means that they somehow avoided the prohibition on the registration of trademarks that are “scandalous, obscene or immoral” in section 9(1)(j) of the Trade-marks Act when they were registered in 1988 and 2012 respectively. (For a discussion of scandalous, obscene or immoral marks see my post here). Unsurprisingly, the respondents in this case (Rogers Communications, MLB, and the Cleveland Indians Baseball Company Ltd.) argued that the Ontario Human Rights Code could have no bearing on the use of registered trademarks in Canada. In other words, they maintained that once a trademark has been registered, the owner has a right to use that mark in Canada, and that such use cannot be interfered with by provincial legislation.

Vice-Chair Jo-Anne Pickel made relatively short work of this argument. She found that the Trade-marks Act does not confer a positive right to use a trademark; rather it grants the right to exclusive use of the mark. The distinction is important. The right to exclusive use of a mark protects the trademark owner against the use of an identical or confusing mark by others. But it does not mean that the owner is entitled to use the mark without limitation or restriction. In fact, Pickel noted that restrictions on trademark use are not uncommon; she cited laws restricting the use of tobacco trademarks in advertising as examples of the kind of limitation that can be imposed on the use of trademarks under either federal or provincial legislation. Similarly, a right to use a trademark can be subject to a provincial law of general application such as the Human Rights Code. She brushed aside an argument by MLB that the continued existence of the ‘Edmonton Eskimos’ trademark demonstrated that not all trademark owners are treated the same way under the Human Rights Code. She noted that “The key is that a similar claim could be brought and that it would be treated in the same way as this Application against the Cleveland Team.” Vice-Chair Pickel also noted that an order that would enjoin the use of the team’s name and logo when it played at Rogers’ Centre in Toronto was not the same as an order prohibiting the use of the trademark entirely; the jurisdiction of the tribunal was limited to the scope of application of the Human Rights Code.

Pickel also rejected arguments that the application of the Code in this context would intrude on federal jurisdiction over trademarks. She noted that courts have described the core of the federal power over trademarks as being “to establish a national system for the adoption, use, transfer, and enforcement of rights in respect of registered and un-registered trademarks.” (at para 52). In her view, “the application of the Code to the use of particular trade-marks in the context of baseball games at the Rogers Centre would fall outside this core.” (at para 52). She found that the application of the Code would not frustrate the purposes of the Trade-marks Act, and concluded that nothing in the Constitution deprived the human rights tribunal of jurisdiction over the issue of the legitimacy of the use of the team name and logo during baseball games at Rogers Centre.

The result of this decision is to remove roadblocks to the case moving forward. The adjudicator noted that it would still remain to be determined at the hearing whether baseball games being held at Rogers Centre constitute a service under the Code. Further, it remained to be determined just how each of the three respondents was linked to the delivery of these services for the purposes of the application of the Code.

Because Cardinal is also proceeding with a complaint under the Canadian Human Rights Act (CHRA) relating to the broadcasting of the games (since broadcasting is under federal jurisdiction, it is the CHRA that would apply to those particular services), Pickel expressed concerns about both matters proceeding simultaneously. Because of the considerable overlap in factual and legal issues to be determined, there is a risk that the two tribunals might reach conflicting decisions on key issues of law or fact. She asked the parties to provide her with additional information about the status of the complaint under the CHRA in order to determine whether it would be best to postpone the hearing on the Human Rights Code application until the decision under the CHRA is rendered.

While it is almost certain thatnothing will happen quickly as these matters proceed through the notoriously slow human rights tribunal processes, what is important is that something is finally starting to happen around the issue of offensive trademarks for sports teams in Canada. The legal tide is turning against the viability of such marks, creating new pressure for organizations to reconsider the value of clinging to offensive monikers in the name of ‘tradition’.

The U.S. Court of Appeals for the Ninth Circuit has applied U.S. trademark law (the Lanham Act) to the activities of a Canadian citizen operating a business in Vancouver. The court acknowledged that it was applying the Lanham Act extraterritorially, but ruled that it was justified in doing so on the facts of the case.

The extraterritorial application of trademark law is unusual. Registered trademarks are valid only in the country of registration. A Canadian who uses trademarks in Canada could normally only infringe another party's trademark rights if those rights have been acquired through registration or use in Canada. Countries normally get to decide which marks receive protection within their own borders, and a judgment from a foreign court would not be enforceable in Canada without a Canadian court’s approval. The decision in Trader Joe’s Company v. Hallatt, which applies U.S. law to U.S. registered trademarks used in Canada, is therefore quite unusual. However, the facts of the case are also unique.

Many Canadians will recognize the name Trader Joe’s. This grocery store chain, which operates exclusively in the U.S., has carved out a niche for itself as a purveyor of high quality fresh foods. A majority of the products sold in Trader Joe’s stores are branded with Trader Joe’s’ U.S.-registered trademarks. The company has no stores in Canada. It may have contemplated a possible expansion north of the border; in 2010 it took steps to register two of its trademarks in Canada. However, these registrations have not been perfected – quite probably because the company has not started to use the marks in Canada.

The defendant Hallatt is a Canadian citizen living in British Columbia who also has permanent resident status in the United States. In 2011 employees of a Trader Joe’s store in Washington State noticed that Hallatt was making several large purchases per week. It transpired that he was driving the purchased goods across the Canada/U.S. border in order to sell them in Canada. He later opened a store in Vancouver for this purpose. Originally called Transilvania Trading, he changed its name to Pirate Joe’s.He sold Trader Joe’s labelled merchandise at this store at prices considerably higher than in the U.S. After Trader Joe’s took steps to limit Hallatt’s access to their stores, he began to wear disguises to make his purchases. There was also some evidence that he hired people to purchase goods from Trader Joe’s that he could then bring into Canada. The court also found that he used a store sign that resembled Trader Joe’s’, and that the trade dress of his store also resembled that of the plaintiff company.

Trader Joe’s objected to this use of their trademarks and trade dress in Canada. They alleged that it could cause confusion among Canadian consumers who were familiar with the U.S. brand, and that the defendant’s activities might harm their trademarks because they had lost the ability to maintain their strict controls over product quality and freshness. They alleged that they had already received one complaint from a customer who had been made ill after eating Trader Joe’s food from Pirate Joe’s in Canada. They were also concerned about harm to their reputation because the food sold at Pirate Joe’s was overpriced and because the customer service did not meet their standards. Since Canadians would also cross the border and shop at Trader Joe’s stores in the U.S., harm to the store’s reputation from Pirate Joe’s activities in Canada could have an effect on the U.S.-based business.

The complex set of cross-border factors in this case motivated the Court to find that Hallatt had violated the Lanham Act. In the first place, they found that the “use in commerce” requirement of the Lanham Act had been met. Normally, where there is extraterritorial application of the Lanham Act, the plaintiff has to show that goods sold outside of the U.S. have made their way back into U.S. markets in order to show use in commerce. This was not the case here. However, the court was prepared to find that there was nevertheless an impact on U.S. commerce from the sale of the goods in Canada. This flowed from the potential reputational harm from the sale of products of compromised quality and from selling the goods at inflated prices. The court noted that Canadians were regular customers at the Trader Joe’s stores in northern Washington State (40% of credit card transactions at the Bellingham store were by non-residents of the U.S.). These customers might be confused by the sale of Trader Joe’s products in Canada, and might form a negative opinion of the company if the goods sold in Canada were overpriced or of inferior quality. The Court also found other links to the United States that could be used to ground a decision to apply the Lanham Act extraterritorially. The defendant travelled to the U.S. to purchase the goods and/or hired people based in the U.S. to purchase them for him.It also found that his activities might have been assisted to some extent by his landed immigrant status in the U.S.

International comity is a relevant consideration in deciding on extraterritorial application of a country’s laws. The idea is to interfere as little as possible with the sovereignty of another state. In this case, the court noted that there was no ongoing litigation in Canada over trademark issues on the same facts. It also noted that both parties in this case had ties to the United States; the defendant through his landed immigrant status.The Court also found that “an essential part” of Hallatt’s commercial venture took place in the U.S. Perhaps most importantly, the Court found that it was in a position to order the remedies sought by Trader Joe’s. The defendant had assets in the United States so that an award of damages could be enforced in the U.S. against those assets. A court in the U.S. could also order an injunction to stop Hallatt’s activities in purchasing the goods in the U.S. for export to Canada.

The particular facts of this case were clearly a central factor in the court’s decision to apply the Lanham Act extraterritorially. In this sense, then, the case does not signal a shift that would see U.S. courts hearing a flood of trademark infringement suits relating to U.S.-registered trademarks that happen to be used in Canada. Without the substantial links to the U.S. – and the deliberate attempt to trade on the goodwill of the U.S.-based company, the court would likely not have extended U.S. law in this case. Nevertheless, it is a warning to Canadian entrepreneurs that the exploitation of well-known U.S. trademarks, even if not registered in Canada, could, in the right circumstances, expose them to liability on either side of the border.

A small Canadian company seems poised to take on the Canadian Intellectual Property Office (CIPO) over the issue of whether the trademark it seeks to register for its vodka, LUCKY BASTARD, is scandalous, obscene or immoral.

Similar to laws in other countries, Canada’s Trade-marks Act bars the registration of marks that would offend public mores. Or at least, that’s the theory. According to s. 9(1)(j) of the Act, no mark that is “scandalous, obscene or immoral” can be adopted as a trademark. Other provisions of the statute bar both the registration (s. 12(1)(e)) and the use (s. 11) of such marks.

The decision as to what is “scandalous, obscene or immoral” is in the hands of the Registrar of Trademarks. The only guidance provided by CIPO on this issue is found in the Trademarks Examination Manual. According to the Manual,

A scandalous word or design is one which is offensive to the public or individual sense of propriety or morality, or is a slur on nationality and is generally regarded as offensive. It is generally defined as causing general outrage or indignation.

A word is obscene if marked by violations of accepted language inhibitions or regarded as taboo in polite usage. This word is generally defined as something that is offensive or disgusting by accepted standards of morality or decency; or offensive to the senses.

A word or design is immoral when it is in conflict with generally or traditionally held moral principles, and generally defined as not conforming to accepted standard of morality.

Clearly, there is an element of subjectivity in making such assessments. In the case of the word “bastard”, it is fair to say that today it is generally considered to be a highly inappropriate term to use to refer to a child born to an unmarried mother. What is less clear is whether, used today in its more casual sense – as in the expression “lucky bastard” – it rises to the level of “causing general outrage or indignation”.

Canada has almost no case law on how to interpret and apply s. 9(1)(k). The experience in other jurisdictions has highlighted the often contentious and sometimes seemingly arbitrary approach to comparable provisions. In some cases, applicants for registration seek to use controversial words in a deliberately edgy way. In a case currently making its way through the courts in the U.S., an Asian-American dance rock band called The Slants is challenging the U.S. Patent and Trademarks Office’s refusal to register their band name as a trademark. They argue that the denial or registration violates their freedom of expression. The band apparently seeks to ‘reclaim’ the otherwise derogatory term. When the trademark DYKES ON BIKES was initially denied registration in the U.S., its owners argued that the term DYKES, although derogatory in some contexts, was, when used self-referentially, had been re-appropriated and was a term of empowerment. These arguments were ultimately successful.

The arbitrariness of provisions barring the registration of trademarks on public order and morality grounds is not limited to the difficult issues around what terms are offensive and in what contexts. A quick search of the Canadian trademarks register reveals that the word “bastard” already appears in several registered trademarks, including FAT BASTARD BURRITO, DOUBLE BASTARD (for beer), PHAT BASTARD (for oysters) and FAT BASTARD (for wine). It is clear from the register that several other attempts to register marks containing the word “bastard” have been abandoned – possibly over objections to the propriety of the term.

In the U.S., challenges to the constitutionality of the equivalent U.S. provision on First Amendment (free speech) grounds have thus far failed. Courts have ruled that the provision only bars registration and not use of the mark, and therefore the right to expression oneself by using the term as an (albeit unregistered) trademark is not affected. The government remains entitled to refuse to grant a state sanctioned monopoly right to use a term that is immoral or disparaging. The constitutional issues will be under scrutiny again in the case involving The Slants, as well as in the infamous Redskins case both of which are making their way through the appellate courts in the U.S. Freedom of expression arguments in relation s. 9(1)(j) of Canada’s Trade-marks Act have yet to be tested in court. It is worth noting that in Canada it is not just registration that is denied to a “scandalous, obscene or immoral” trademark, but also adoption and use. Nevertheless, freedom of expression challenges to a similar provision in Europe have failed under the European Charter of Human Rights because of counter-balancing considerations similar to the Canadian Charter’s tolerance of “reasonable limits” placed on rights so long as they are “demonstrably justified in a free and democratic society”.

There may well be reasons to deny registration to trademarks that clearly cross the line of what is acceptable. Our laws make it clear that discrimination and hate speech, for example, are not tolerated. Perhaps what is needed is a refocussing of the s. 9(1)(j) discretion to concentrate on trademarks that offend norms that are clearly supported by other legislation and the constitution.

The disallowance of LUCKY BASTARD should also be considered in the light of the recent controversy regarding the Edmonton football franchise’s ESKIMOS trademark. The later term is considered derogatory and disparaging of Canadian Inuit (and I note that there a great number of other trademarks on the Canadian register that contain the word “eskimo”). Justice Murray Sinclair of the Truth and Reconciliation Commission has recently called for action to address the use of offensive and racist sports mascots and team names. The infamous Washington Redskins trademarks – under challenge in the U.S. – are also registered (and as yet unchallenged) trademarks in Canada. The arbitrary application of public morality clauses in trademarks law brings discredit to the system. It may also serve to highlight the extent to which some biases are so ingrained within the system that they become normalized.

If the owners of Lucky Bastard Vodka do eventually have to take their trademark fight to court it might mean that we finally get some judicial insight into the proper interpretation and application of s. 9(1)(j). This would surely be welcome.

It is rare that a trademark law dispute becomes the subject matter of a documentary film – rarer still when it is a Canadian case that is the focus of attention. Yet some trademark disputes transcend the legal issues that give rise to them. This is so with the case that inspired Heidi Lasi’s recent documentary titled The Oasis Affair. This short film explores the dispute between Les Industries Lassonde, Inc. (a major Quebec company that produces, among other things, OASIS brand juices) and Olivia’s Oasis, a small Quebec business producing soaps and skin care products made with olive oil.

The conflict between the two companies arose from a trademark infringement lawsuit brought by Les Industries Lassonde against Olivia’s Oasis. Lassonde argued that the Olivia’s Oasis trademark for skin care products created consumer confusion with their well-known mark OASIS for fruit juice. Not only did the defendant rebut the trademark claims, it also argued that the lawsuit against it was abusive litigation under relatively new provisions of the Quebec Code of Civil Procedure. These “anti-SLAPP” provisions are intended to discourage parties with deep pockets from using the threat of litigation either to pressure small parties to comply with their demands or to face financial ruin through costly litigation. At trial, Justice Zerbisias of Quebec’s Superior Court found not only that there was no merit to the trademark infringement suit brought by Les Industries Lassonde, Inc., she also agreed with the defendants that the suit fell within the ambit of the anti-SLAPP provisions. She awarded Olivia’s Oasis $125,000 in extra-judicial costs and punitive damages.

While accepting the trademark law outcome, Les Industries Lassonde appealed the award of damages to the Quebec Court of Appeal. [Spoiler alert: stop reading here if you want to learn how it all ends from watching the video.] This Court found that Lassonde’s motives in commencing litigation were not improper. After all, they opined, a trademark that loses its distinctiveness can no longer function as a trademark; a trademark owner must therefore take the necessary steps to preserve the distinctive character of its marks. It nullified the award of damages to the defendant.

Not only does The Oasis Affair provide an account of the litigation, it tells the remarkable story of the social media outcry that followed the Court of Appeal’s decision. In a very short space of time, Les Industries Lassonde faced an unprecedented public backlash – one that ultimately led them to compensate Olivia’s Oasis for the legal fees that had left the small company teetering on the edge of failure.

Heidi Lasi’s documentary is a crisp, engaging account of this case and its aftermath. The film leaves the viewer with an appreciation of the power of social media to create a “court of public opinion”; and suggests that the Olivia’s Oasis affair heralds an important change in how trademark holders must approach the protection of their trademarks and brands.

The Pan Am/Parapan Am Games are set to open in Toronto on July 10, 2015. As with any other major sporting event, these Games raise the possibility of ambush marketing – a form of marketing activity designed to take advantage of public interest in a high profile event.

Major event organizers (including the International Olympic Committee, FIFA, and others) see ambush marketing as a threat to their ability to obtain top dollar for lucrative sponsorship opportunities, and they have increasingly put pressure on host countries to enact legislation to prevent ambush marketing. This legislation has proven controversial – and for good reason.

If you are interested in ambush marketing and the Pan Am/Parapan Am Games, you can read my blog post on this issue on Osgoode’s IPilogue here.